Deduction under section 80GGC of Income Tax Act

Vide Finance Act 2009, deduction under section 80GGC was introduced mainly with an objective of achieving transparency into the electoral funding system and also reducing corruption to some extent. Section 80GGC provides deduction towards donations / contribution made to a political party or an electoral trust.

It is worthwhile to note here that deduction under section 80GGC is covered under Chapter VIA deduction. Meaning thereby that the total amount of deduction allowed to an assessee cannot exceed the total taxable income of an assessee. The present article tries to cover all the provisions concerning the deduction under section 80GGC.

Categories of persons qualify for claiming deduction under section 80GGC –

• The deduction under section 80GGC can be claimed by an assessee, being any person.
• The deduction cannot be claimed by local authorities and every artificial juridical person which is either wholly or partly funded by the Government.
• The deduction under section 80GGC cannot be even claimed by the companies.

Donations / contributions which qualify for deduction under section 80GGC –

In order to claim deduction under section 80GGC, the individual is required to make donations / contributions only to the following entities –

• A political party; or
• An electoral trust.

It should be noted here that the political party referred above covers only a political party which is registered under section 29A of the Representation of the People Act, 1951. Any donation / contribution to any other political party would not qualify as a deduction under section 80GGC.

Amount of deduction available under section 80GGC –

The whole of the amount of contribution / donation is available as a deduction under section 80GGC. In other words, a 100% deduction is available to an amount contributed towards a political party or an electoral trust under section 80GGC.

Qualifying Mode of payment –

• For claiming deduction under section 80GGC, an assessee can adopt any mode of payment which is linked through a banking channel like online net banking or demand draft or cheque or debit card etc.
• Any contribution / donations through cash is not eligible for deduction under section 80GGC.
• Further, any donations made in kind also doesn’t qualify for deduction under section 80GGC.

Frequently Asked Questions (FAQ) –

Q.1 What is Section 80GGC?

Ans: Section 80GGC of the Income Tax Act provides a deduction to an assessee, being any person, towards an amount contributed to either a political party or an electoral trust.

Q.2 Is donations to political parties deductible?

Ans: Yes, any donations to a political party which is registered under section 29A of the Representation of the People Act, 1951 qualifies as a deduction.

Q.3 What is the difference between section 80GGB and section 80GGC?

Ans: Section 80GGB and Section 80GGC both covers deduction towards contribution / donation made either to a political party or to an electoral trust. However, section 80GGB allows a deduction to an Indian company, whereas, section 80GGC allows a deduction to an assessee, being any person.

Q.4 Can I claim deduction on donations made to multiple political parties?

Ans: Yes, the eligible assessee can claim a 100% deduction under section 80GGC towards donations made to multiple political parties.

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